State claims no one else in Alaska would take $441,000 no-bid Penney deal

The etiquette that governs a legislative hearing often makes it impossible to pierce the bureaucratic fog.

That’s what we have in the campaign to disguise the obvious political origins of the no-bid contract given by the Dunleavy administration to the grandson of Bob Penney, the wealthy benefactor who invested $350,000 in helping Dunleavy become governor.

Deputy commerce commissioner John Springsteen, and the executive director of the Alaska Industrial Development and Export Authority, Tom Boutin, succeeded at a legislative hearing Tuesday in creating far more confusion than the public should have to endure regarding the Clark Penney no-bid contract.

Understandably, given the time constraints and the muddled statements of the two witnesses, the press coverage that followed in the Anchorage Daily News and on KTUU was muddled. It shouldn’t end there, however.

The deflection and half-truths from Springsteen and Boutin followed a performance last week by Julie Anderson, commerce commissioner, in which she claimed she couldn’t say anything about the deal. She failed to inform legislators that she helped negotiate the contract and played a central role in setting it up.

The volume of bafflegab is a clear indicator that the contract began as a political favor to the Penney family, but making that admission would harm the governor and boost the recall effort.

The $8,000-per-month contract was never about trying to get the best deal for the state, but about getting the best deal for Bob Penney’s grandson. After deciding to give him the contract last year, the state invented laughable excuses about why a no-bid deal was in Alaska’s best interest.

“We will also need to put together a sole source justification,” one AIDEA official wrote last March, suggesting that Penney could be given authorization on the phone to start work that day.

The contract probably started with a request from the governor’s office. Anderson, the commerce commissioner, set up a plan for the commerce department to pay AIDEA to hire Penney, part of a sustained effort to evade state rules requiring competition. The original plan was to fund the contract entirely with money from Anderson’s department. For some reason, AIDEA operating funds became the money source in July.

Boutin and Clark Penney were both among the many deputy treasurers on the Dunleavy campaign in 2018. Clark Penney received $10,000 in “consulting fees” from the governor’s campaign committee.

Penney was not doing work for AIDEA under the no-bid deal, Boutin said last spring. At the time, Boutin said he wasn’t supervising Penney and he didn’t even know what department the Alaska Development Team was operating out of.

Penney is described on AIDEA invoices as the “managing director” of the development team, but the commerce department says he is not the managing director.

Boutin wrote last summer that he didn’t have the authority to extend the Penney contract for the fiscal year that began July 1.

“I would imagine that we are to extend it but it is not my call,” Boutin wrote to other AIDEA officials on June 27, adding it was up to the commerce department. “I have forwarded the info—as soon as I received it—to the department.”

Boutin said AIDEA could not change Penney’s $8,000 a month pay without talking to the commerce department and to Penney first, but the “sole source documentation, in particular, and potentially the contract can be rewritten in any way we see fit.”

On Tuesday, Boutin contradicted much of what he wrote last summer, now claiming that it was his decision to sign the deal and renew it. He said the buck stops with him.

Anderson and Boutin certainly know the political factors that led the state to give Penney a multi-year deal worth up to $441,000. But revealing any of that would be a political disaster for Dunleavy.

Rep. Colleen Sullivan-Leonard, a Dunleavy ally, took umbrage at a few pointed questions directed at Boutin by Rep. Zack Fields Tuesday and tried to make the Clark Penney discussion go away forever.

“This is getting into political theater and it’s something I don’t appreciate. We’ve got work to do here at the table. I’m here to work. I mean it’s not a Clark Penney committee,” said Sullivan-Leonard.

Had Sullivan-Leonard not left the theater early, she would have heard the portion of the play in which Boutin deflected and dodged, claiming that $8,000 a month for four years is such a piddling amount that no one else in Alaska would do the work.

There is no evidence that claim is true. There is no reason to believe it is true.

“This is a very small amount of money,” Boutin said, pointing out that Penney has to take taxes out of it.

After questioning by Rep. Jonathan Kreiss-Tomkins, Boutin repeated that he is certain that there would be no competition for an $8,000-a-month deal, so Penney was the only choice.

That extreme statement contradicts the sole-source justification the state signed for the deal last March. Even that document made the dubious claim that Penney’s experience and networks would be hard to duplicate in Alaska.

“I did ask our people, you know, for this kind of money, that I understand, you know, that people want to pay, can we go out there to any of our existing ongoing contractors that we use—and I was told they’ll laugh at you for that kind of money—and I know that to be true,” Boutin said.

I don’t think anyone’s laughing.

“I sign invoices to contractors that make me lose sleep at night. And this isn’t one of them. This one we’re getting the worth out of it,” Boutin said.

Boutin claimed that the state could not duplicate what Penney is doing for $16,000 a month.

“Certainly we couldn’t duplicate it for twice the money and maybe there are people out there that would say that we couldn’t duplicate it for three times the money,” he said.

Anyone who is claiming that no one in Alaska would perform this task for $8,000 a month and that it is worth $16,000 a month or $24,000 a month should not be leading a state agency that handles hundreds of millions.

If Penney is providing services worth $16,000 a month or $24,000 a month, a competitive process would have been the way to prove that hiring him was the bargain of the century, not just a political payback.

Every time the number $441,000 comes up, the four-year value of the contract, Boutin objects, as he did Tuesday. Boutin was asked if Penney reports his hours on his invoices.

“First of all, I’ve got the costs here some place, nothing like a half-million dollars,” Boutin told Fields. “It’s not a fraction of that. And again, point 02 percent of what we’re going to spend in a year’s time on public finance contractors.”

“But to answer your question, yes, Clark Penney’s invoices and the associated work product that comes with it do indicate the time he’s spending and what he’s working on,” said Boutin. He said Penney lists how much time he puts in.

It may be that Boutin pays attention to the invoices. Maybe he was just making up it up as he went along.

Penney doesn’t report how many hours he works each month. He submits a three-or-four-page invoice like this one for September, this one for November and this one for December.

This debacle deserves a state investigation. The no-bid contract should be canceled.

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